The frenzy to acquire fast-growing technology start-ups reached new heights on Wednesday as Facebook announced its largest acquisition ever, saying that it will acquire the fast-growing mobile messaging service WhatsApp firm for some $16 billion in cash and stock. The deal includes an additional $3 billion in Facebook stock for the employees of WhatsApp, who would see the shares vest over four years.
The transaction involves $4 billion in cash, about USD 12 billion worth of Facebook shares and USD 3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that will vest over four years following the closing of the deal. With WhatsApp acquisition, the 10-year-old Facebook looks to attract its next billion users while keeping its existing 1.23 billion members, including teenagers, interested.
Founded by a Ukrainian immigrant who dropped out of college, Jan Koum, and a Stanford alumnus, Brian Acton, WhatsApp is a Silicon Valley startup fairy tale, rocketing to 450 million users in five years and adding another million daily. “No one in the history of the world has ever done something like this,” Facebook Chief Executive Mark Zuckerberg said on a conference call on Wednesday.
Facebook says that WhatsApp, like Instagram, will remain largely independent from the social network. The acquisition positions the company for even stronger growth on mobile phones, where advertising now makes up the majority of its revenue. It also strengthens its toehold in China: Facebook is blocked in the world’s largest Internet market; WhatsApp and Instagram are permitted to operate there.
By any measure, Facebook is paying a steep price for a service that is widely used internationally but is less known in the United States. WhatsApp does not sell advertising and has very little revenue. It charges users a flat fee of $1 a year to use the service, and the first year is free. So, It remained unclear how Facebook planned to eventually make money from WhatsApp.
Latest posts by Anurag (see all)
- Off-road and On-road Tata Hexa Experience for the car lovers - December 29, 2016
- Friends who define the true equation of Friendship - October 7, 2016
- Freecharge, the Best Digital Wallet in the Digital Ecosystem - September 28, 2016